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Tempers flare as tax bills advance

Nine bills that suspend or eliminate tax exemptions on such things as candy and computers likely will land on Gov. Bill Ritter’s desk this week.

Removal of the exemptions are part of an overall plan pushed by Ritter to balance not only next year’s budget, but also the current one.

Although that plan includes millions of dollars in cuts to state programs, the measures aren’t getting out of the Legislature without grueling late hours and flaring tempers that have highlighted battles over the past two weeks between Democratic lawmakers who backed them and the Republicans who didn’t. The bills passed the Senate mostly on 18-17 or 19-16 votes. Sens. Gail Schwartz, D-Snowmass Village, and Bruce Whitehead, D-Hesperus, voted no on all of them.

Democrats said the measures weren’t something they really wanted to do, but the state’s budget woes gave them little choice.

Republicans said the measures aren’t something they should do under any circumstances, much less during the worst recession in decades.

The measures remove, some for only a few years, tax breaks on such things as soda and candy, energy used for industrial purposes, direct-mail advertising and computer software.

Senate Minority Leader Josh Penry, R-Grand Junction, said the bills would place too heavy a burden on Colorado consumers and businesses.

“I found the tip-toeing, the laborious attempts to describe these measures as something other than a tax increase as disingenuous,” he said. “Seventeen million dollars is what the Democratic majority’s asking businesses to pay in addition to all the other taxes and fees.”

He said Republicans instead suggested further cuts in state spending, but complained that Democrats would have nothing to do with their ideas.

Democrats, however, argued the state has cut and then some, billions of dollars worth, and doing more only would result in laid-off teachers and cutting whole programs for Colorado’s most vulnerable population.

Sen. Maryanne Keller, D-Wheat Ridge, admonished Penry on the Senate floor last week for calling for cuts in state programs and then balking at ones in his own district. She said Penry accused Ritter and the Democrats of not being able to make tough choices in budget cuts, but cried foul when the governor announced the closure of 32 beds for the developmentally disabled at the Grand Junction Regional Center, a move that is to save the state about $1.3 million.

“I’ll tell you why folks in Grand Junction were outraged,” Penry shot back. “The arrogance and hypocrisy is to suggest that the only place in a vast and growing government to cut is in the basic social safety net. It’s farcical. It ignores the fact that in the past 18 months since the hiring freeze has been in place, 2,300 state employees have been hired. If you cut that by 6 or 8 percent, you don’t have to kick the most vulnerable onto the street.”

Penry and the Republicans argued that the measures would kill jobs in the private sector at the expense of saving government ones. If private companies end up laying off more workers because of the increase, they said, the state would see additional reductions in revenue that will lead to laying off government workers anyway.

Sen. Kevin Lundberg, R-Berthoud, said the bills were illegal because they constitute a tax increase, and the Taxpayer’s Bill of Rights requires voter approval.

But Democratic lawmakers said that’s not true. Last year, the Colorado Supreme Court ruled removing exemptions are not increases in tax rates because they are not meant as entitlements to be given out indefinitely, Keller said.

The Democrat-controlled House is expected to cast its final votes on the bills as early as Monday and approve the bills.

Democratic leaders said the governor needs to sign them by the end of the month because the state needs the anticipated $18 million they will generate for the remainder of the fiscal year, which ends June 30. The bills are expected to generate about $300 million over the next three years.